The Breakdown - For the First Time Ever, Crypto is an Official Part of a Major Political Party Platform

Episode Date: July 10, 2024

The GOP officially released their platform this week and crypto made the cut. NLW shares community reactions to the concise but frankly pretty encouraging section on cryptocurrency. A right to mine? A right to self-custody? Boy, how the times have changed. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Tuesday, July 9th, and today we are talking about crypto in the official GOP platform. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it. Give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Hello, friends. Today feels like a bit of a culmination of the political wind-changing stories that we've been covering for the last month or so. TLDR, the Republican National Committee, has released their

policy platform, and for the first time in history, crypto has been formally included. So let's talk about what that means and what it says about the state of the political crypto discourse. The platform is intended to lay out the priorities of a Trump administration as the presumptive nominee heads to the Republican National Convention next week. The party stands on crypto is outlined in a section that is in their words aimed at building the greatest economy in history under the subsection of championing innovation. It reads, Republicans will end Democrats on lawful and un-American crypto crackdown and oppose the creation of a central bank digital currency. We will defend the right to mine Bitcoin and ensure

every American has the right to self-custody of their digital assets and transact free from government surveillance and control. That's the entire position. And frankly, it is three lines that address a huge swath of the big-picture priorities put forward by the industry. Crypto policy fits in alongside AI and the commercial space sector as key areas of innovation the GOP wants to promote. The overall economic theme is regulation and tax cuts alongside protectionist trade reform and energy dominance. It is worth noting that crypto isn't a large enough priority to rank in the 20 bullet point summary of the platform. That summary has a heavy focus on immigration reform and, frankly, other culture war talking points. The closest it comes to a crypto-adjacent

point is a pledge to, quote, end the weaponization of government against the American people. The press release accompanying the platform also declines to mention crypto or CBDCs. One takeaway, perhaps, is that the inclusion of the crypto platform is aimed squarely at appealing to single-issue crypto voters rather than prospective Republican voters more generally. Still, this seems to be enough for industry folks who have been kicking the tires on a potential Trump administration over the recent months. Nick Carter of Castle Island Ventures tweeted, official Republican Party platform on crypto couldn't really ask for anything more.

And crypto crackdown, no CBDC, right to mine, right to self-custody, right to transact freely. Kristen Smith, the CEO of Blockchain Association, also strongly endorsed the platform, writing, An Incredible Moment for Our Industry in Washington. The Republican platform includes a section on crypto that makes the simple, correct case, let this transformative technology thrive in America. We encourage political candidates from both parties to embrace this perspective. And indeed, this seems to be the general view,

that the industry hasn't asked for much more than the permission to exist. That idea itself is deeply ideological, inherently incorporating some amount of reduction of state power over the financial system. And from the Trump detractors, there really isn't much about the platform to criticize. It seems to have been built on really simple fundamentals that almost everyone in the industry is aligned on. For that reason, the criticism that I've seen has mostly been focused on Democrats for leaving the field wide open.

Skybridge Capital founder Anthony Scaramucci wrote, Bitcoin is in the GOP platform. The Democrats have really fumbled the ball on this. Troy Cross, a fellow at the Bitcoin Policy Institute, tweeted, Very smart. Tens of millions of Americans who hold crypto or believe in Bitcoin must now choose between their overall politics and their Bitcoin bags or crypto-living. What an epic own goal by Warren and co. I think one thing that's worth reflecting on here

is what it says about the concern that many rightly, I think, erred when Trump first began flirting with the pro-crypto stance back in March, that it wouldn't really amount to much. It was notable when it came up at all. It was even more notable when crypto started becoming a part of Trump's stump speeches. While critics have pointed out that political talk is cheap, a workable crypto framework is now included in the official policy platform of a major U.S. policy. That all on its own takes crypto policy to an entirely different level of prominence in Washington. To imagine that this would be the state of play heading into the elections was completely unthinkable just a few years ago.

What's more, while we've heard a lot from the loud public Trump boosters over recent months, this platform sheds light on the work that has been going on behind the scenes. Crypto lawyer Preston Byrne detailed his involvement in a Twitter thread, writing, Confession time, back in February when crypto was not an issue in the U.S. election, a Trump campaign surrogate reached out to contribute some crypto policy ideas. I called up Ryan Selkis, we put our noggins together, and out came a document. After we sent it in, Ryan went all in.

I like to have opinions but prefer to avoid direct involvement in politics, so I was happy to step away and told the surrogates I was in touch with to follow up with guys like him instead of guys like me. Regardless, today the GOP adopted several of these suggestions as official policy. To be sure, I am not the only person that campaign surrogates reached out to in formulating their policy, though I was possibly one of the earlier ones. Clearly, the message got repeated enough times along the way that the party decided it was a good idea.

I can see the fingerprints of several other companies in the space on the right to mine and right to self-custody. If the Biden administration had pinged crypto people on these issues instead, I think most of us would have made the exact same suggestions. They didn't want to hear them. Now they've probably lost the crypto vote for the next several cycles. There are a couple of lessons here. A lesser one is that dogmatic opposition to technological progress is a great way to lose an election. I think the most important one is that it's still possible for a handful of people to move the needle. This get Trump into crypto thing started with maybe a dozen conservative fellow travelers working on this issue isolated and alone, who then became a group of people loosely

coordinating together, which has since transformed, snowballed into an entire industry charging forward and lockstep. Whatever your issue is, never give up. And I think here there is a broader point that's interesting to me as well. You can see the fingerprints of various pro-tech interest across this policy document. This election cycle feels to me like one of the first times that the broader tech industry has engaged with politics as anything like a coordinated unit. There have, of course, always been wealthy tech donors that seek to impact a social or economic agenda, but we rarely see tech advancement itself as the subject to policy discussions. Crypto is a big part of it, but it definitely cuts across more tech subcultures.

Over the weekend, Mark Andreessen of A16Z published a threat entitled The Little Tech Agenda. He noted that tech startups have been independent of politics for his entire career, but that period has come to an end. Instead, Andresen thinks that, quote, Bad government policies are now the number one threat to little tech. He thinks that engaging with politics is the only way to make sure to retain a American tech leadership. Bayeslord, one of the pseudonymous leaders of the effective accelerationist movement in AI, underscored the point that tech and politics are now intrinsically

linked, tweeting, if your techno manifesto has no politics, it's not a manifesto, it's entertainment. These things cannot be divorced from politics. Most serious disagreements on these topics come not at the basic level is technology good, but rather precisely at the points where power is fought over where it is won and lost. Hello, friends, before we get back to the rest of the show, I want you to join me at permissionless. Permissionless is a conference for crypto-natives by crypto-natives. And the reason it's so important this year is that despite regulators' best attempts to push industry founders, devs, and executives out of the U.S., the U.S. remains the beating heart of crypto. Today, the tide is turning.

Policymakers have pivoted from fighting crypto to embracing it, which will lead to the creation of new financial products, new applications, and ultimately new adoption. Permissionless is a conference for those using and building on-chain products. It's home to the power users, the devs, and the And what's more, I'm going to be there. The location is Salt Lake City. The dates are October 9th to the 11th, and right now, tickets are just $199. Towards the end of the month, they're going up to $499, and if you want 10% off, use code breakdown 10 when you check out.

If you go to the Blockworks website, blockworks.com, there will be lots of information about how to register, and again, use code Breakdown 10 to get 10% off. One thing that I just want to hammer on before we move on from this topic is how much we have to thank the people who have been working on this tirelessly for years behind the scenes. There are many examples, many of whom get quoted day in and day out on this show. One of them is Dennis Porter from the Satoshi Action Fund who really sums this all up in a thread. Dennis writes, This is a huge moment where an entire party is now absorbing many of the critical advances

that have been made at the state level to defend Bitcoin rights. Since the inception of the Satoshi Action Fund, we have been fighting to pass laws at the state level to protect Bitcoin and ban CBDCs in order to create the political willpower for federal action. In 2015, Bloomberg studied the impact of state activity on federal policy decisions. Everything from a women's right to vote to cannabis legislation started at the state level. Now we see the right to mine and Bitcoin rights being adopted by one of the two major parties. It is now only a matter of time until we see the USA enact pro-Bitcoin policies at the federal level.

The team at the Satoshi Action Fund is honored to have been the first in the world to protect Bitcoin mining with our right to mine bill and to protect self-custody via our Bitcoin Rights bill. Over 20 states have considered Satoshi Action Model Policy. Four have passed it into law and in the back half. of 2024, two key battleground states will consider passing these protections. Thank you to our supporters and those who believe in the power of state work. Thank you to the lawmakers at the state level and their leadership. Together we use the Laboratory of Democracy to achieve this win. But we will not stop here. We believe both parties and the whole country should pass Bitcoin rights into law. All Americans

must benefit from Bitcoin across this nation before we will rest. Once we accomplish this mission, we will guarantee the promise of Bitcoin for generations to come. I'm sure there will be more on this as we move into the Republican Convention and further into the election cycle. But for now, let's shift and follow up with a couple stories that we've been following closely as well. The German government accelerated their Bitcoin selling again on Monday, sending around 900 million worth to multiple exchanges and trading firms. Around 210 million was returned later in the day, but this was still their largest day of selling by a massive margin. The Germans have now sold almost half of their Bitcoin with around $1.5 billion worth remaining. We still don't have a good sense of what the plan is

or why some Bitcoin is being returned from exchanges at the end of the day. However, this acceleration in selling seems to confirm that it's more to do with inventory management than buybacks, as some had suggested last week. Sifting through the transaction data, it seems as though the accelerated selling was facilitated by more OTC deals or trading firms upping their size. Transfers to the major exchanges were larger than usual but nothing excessive. The largest transfers were to a trading firm called Flow traders. They took on 5,200 Bitcoin and multiple transactions throughout the day,

worth around 300 million by themselves. None of this Bitcoin was returned at the end of the day, so it was presumably sold into the market or warehoused. Bitcoin's price, given all this, held up well throughout the day, recording a 3.7% gain after a moderately large tumble in the middle of the day. We'll have to see whether this is repeatable across multiple days, but it's starting to look as though the market can absorb the German supply at these levels. It might be too much to ask for around 700 million in cell pressure to be worked through every day, but there is a pathway for this selling to wind up within a week or two.

And frankly, even if it doesn't, seeing the market be able to handle this does lessen the cycle biological impact that was so integral to the market crash at the end of last week and over the weekend. Keeping tabs on the Mount Gawks unlock, no further timeline has been sent to distribution agents, however BitStamp has firmed up their timeline. The exchange confirmed that they have 60 days to pass the Bitcoin onto individual creditors, but said, we are of course working to make sure those investors are made whole as soon as possible. No word at this stage from Crack and the other large distribution agent. They have 90 days to complete the distribution once the Bitcoin is transferred. Mount Gok's wallets haven't moved since Sunday, and there have been no

further communications from the estate trustee. Interestingly, with Bitcoin dumping over the past few weeks, the newest cohort of Bitcoin buyers are now stepping into buy the dip. Bitcoin ETF saw $384 million in net inflows across last week. The biggest day of buying was Friday following the massive rinseout prior to market open. This was the first positive week after three weeks of net outflows. The strong buying continued into Monday, which saw $295 million in fresh inflows. This is the biggest single-day inflow for the ETFs in several weeks, with every single fund

positive or flat on the day, including a rare day of modest net inflows. for grayscale. BlackRock led the day with 187 million worth of inflows, followed by Fidelity, who also had a strong 61.5 million. In other areas, we've seen Solana ETF 19B4s filed. We've seen another round of updates on the Ethereum ETFs flood in on Monday. And all in all, it's hard not to feel a bit of a shift in tone. That doesn't mean we've seen some massive price recovery, although at the time of recording, Bitcoin is up about 2.5% on the day. But since so much of the downshift over the last month has been sentiment-driven, and interpretation-driven, it's still notable to feel that shift in tone across the market. Whether that holds up or whether it's a temporary

divergence and we go back down remains to be seen, but for now, not a bad way to start this week. That is going to do it for today's breakdown. Appreciate you listening as always. And until next time, be safe and take care of each other. Peace.